Don't hold your breath for loans from the Red Sheds

Don’t hold your breath about getting a bargain home loan from The Warehouse in the near future

Friday, May 25th 2001, 5:36PM

by Jenny Ruth

Don’t
hold your breath about getting a bargain home loan from The Warehouse
in the near future, although the company says that’s still
on the agenda.

The discount retailer confirmed on Thursday that
WestpacTrust is its partner in offering financial services to
its customers. The two companies have formed a formal joint venture,
The Warehouse Financial Services, initially capitalised at $5
million.

The new company will have its own board
with four WestpacTrust and four Warehouse directors.

The first products, consumer credit and
risk related products including basic cover insurances, should
be on sale within six months both in The Warehouse’s 74 stores
and through direct mail and over the phone.

WestpacTrust has already been the retailer’s
partner since 1994 in its credit card operations which have about
200,000 customers.

Given that the two companies have already
been working on the idea for months, Good Returns asked why such
a delay before the first products are offered?

"We want the first products to market
before Christmas. That’s still fairly rapid," says The
Warehouse non-retail general manager and former E-Loans boss Bruce Gordon. "It takes
time to get it right."

The Warehouse will look at home loans and
other retail financial services, including savings and investment
services, in the New Year, he says. The current proposal is "a
low risk proposition" requiring only a small amount of capital
which is another reason home loans won’t be offered immediately,"
Gordon says.

"Home loans require greater capital
and are potentially greater risk. We need to understand that before
we rush into it. With credit cards you can take corrective action
on your book with some ease and it’s lower value per customer,"
he says.

It is "just coincidence" that
the announcement came the same day as the government’s budget
and isn’t anything to do with Deputy Prime Minister Jim Anderton’s
plan to start a `people’s bank’ through New Zealand
Post, he says.

Chief executive Greg Muir has previously
said The Warehouse won't be competing head-to-head with the `people’s
bank.’

Under the joint venture deal, WestpacTrust
will provide most of the products, product management expertise
and processing systems, infrastructure and risk/credit management.
The Warehouse will provide its brands and retail outlets as marketing
channels.